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Client received a 1099S for "sale" of easement from DOT to place a new sound wall at edge of property. How do I report?

debbi.riordan
Level 2
I thought they were supposed to just adjust basis but due to 1099S what do we do?
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dkh
Level 12

Report with the cost equal to the proceeds on 1099-S.... keep information so when/if client sells property they adjust basis by the cost applied towards the proceeds

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dkh
Level 12

Report with the cost equal to the proceeds on 1099-S.... keep information so when/if client sells property they adjust basis by the cost applied towards the proceeds

View solution in original post

debbi.riordan
Level 2

Thank you so much. They also received a 1099misc for “rents” which was for compensation while the project was being completed. How do I handle that portion? 

dkh
Level 12

You're welcome.    I'd report the 1099-MISC on Schedule E 

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debbi.riordan
Level 2

Shouldn’t that also be offset and the basis be lowered? 

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dkh
Level 12

Not how I would handle.  I would report as rent income just like the 1099 indicates it was

debbi.riordan
Level 2

Thank you 

PhoebeRoberts
Level 9
Level 9

Surface damages don't reduce basis, no.